This has been a dramatic week in both our economy and the strong reactions from our markets. After last week’s slight positive surprise for growth from the U.S. GDP update, the trend of weakening growth numbers continues. In the fourth quarter, US GDP growth slowed from more than 3% to 2.4%. The recent decline has investors swimming in a tide of risk aversion and anxiety. Most notably, the Atlanta Federal Reserve’s GDP Now forecast calls for a first quarter contraction of nearly 3%. Uncertainty remains, as market participants get ready for the recession that will come.
Swissquote Bank Ltd, explicitly disclaimed liability for any failure to update such information. Please note that they advocate for recipients to exercise independent judgment in considering this information. In Monday’s European morning session, the GBP/USD currency pair was fairly stable, fluctuating near the 1.2950 mark. This relative stability is occurring even against a backdrop of increased overall market volatility in the currency market.
The recently dour economic data was another reminder that Federal Reserve doves liveth. They continue to be unconcerned even in light of surging inflation numbers. Even as fears about inflation continue to headline news, it is the greater immediate drop in growth measures that has grabbed headlines. Investors are pouring into safe-haven assets amid global tariff war concerns. Consequently, the bullion markets continue to flourish from this tidal wave of investment.
The equity markets have certainly not been immune from these rapid developments, and the price action in the S&P500 illustrates this point. The decline made the index drop almost 2% in a single day. It’s on track to end the month down more than 6%. This February-March extension of downward weakness occurs even with March being historically one of the strongest months for equities, further deepening the air of trepidation that is building.
Secondly, there’s a $70 per barrel resistance in the oil market that is creating a topish sentiment in the investment community. Pessimistic growth forecasts only serve to harden this sentiment. At the same time, the Organization of the Petroleum Exporting Countries (OPEC+) is set to begin accelerating production restorations next month. Despite these factors, oil bulls have remained largely unreactive to geopolitical tensions, including reports of President Trump’s dissatisfaction with Putin over plans for Ukraine’s leadership.
The US dollar’s notable weakness has played an overwhelming role on influencing recent market driving forces. At the same time, gold is going through the roof, moving into price ranges it’s never seen before. This movement underscores the shifting investor sentiment as they seek refuge in traditionally safer assets amidst heightened economic and geopolitical uncertainties.